Bank of England Governor Andrew Bailey said pay growth is still too high to be consistent with getting inflation down to target, as data earlier this week showed wage growth remained steady in August.
In an interview with the Belfast Telegraph, Bailey said he “wasn’t surprised” by Wednesday’s inflation reading that indicated consumer prices rising 6.7% from a year ago in September, the same pace as in August.
But he added that he expects inflation to “keep coming down,” despite wage growth which is still near historic highs. “Pay growth as measured is still well above anything that’s consistent with the target,” Bailey said.
He noted that signs of falling core inflation — which excludes more volatile items such as food and fuel — were promising, even though the reading on Wednesday fell by less than expected.
While food inflation continues to edge down too, Bailey said it had “quite a way to go yet.” It comes as the Bank’s Monetary Policy Committee goes into its latest forecasting round, and prepares to announce its latest decision on interest rates on Nov 2.
Last month, the MPC paused its hiking cycle after 14 consecutive rate rises, holding the base rate at 5.25%.
